Initial Coin Offering - simply explained
In this article we explain what an initial coin offering, or ICO for short, is. The term comes from the world of cryptocurrency and is increasingly haunted by the media.
Initial Coin Offering: That is behind it
- An initial coin offering is a kind of crowdfunding of companies that work with cryptocurrency. An ICO enables these companies to raise money without having to submit to the usual difficult process of funding.
- Usually, the capital raising of new startups is lengthy and cumbersome. You only get money from venture capitalists or banks and have to follow strict rules.
- With an initial coin offering, startups can avoid this process. They simply present their project to the public and offer tokens for purchase.
- With these tokens, supporters can then receive a certain number of future cryptocurrencies, for example. Access to the end product through the tokens is also conceivable.
- The product or cryptocurrency is then only developed after funding. With this technology, startups can finance themselves before development and have significantly fewer risks.
- An ICO is also often compared to an IPO. Here a company offers shares of itself in order to receive new financial resources from investors.
In the next article, we will show you how to make money online with cryptocurrency.